Netflix needs cash, selling $200 million in convertible bonds

Netflix is selling $200 million in convertible bonds to Technology Crossover Ventures after a dismal third quarter earnings report.

The company lost north of 800,000 subscribers in its third quarter, rounding out the number to 35.4 million subscribers of both Netflix’s streaming and DVD-rental services. The major subscriber loss came after the company raised its prices 60 percent and then split the company into two parts: Netflix, the streaming arm of the company, and Qwikster, the new DVD-rental side. After bad reactions from its subscriber base, the company decided to call it quits on the idea and assured its investors the company was done making price model changes.

Now it’s reaching out for cash, as stock prices dip from its summer high of $300 a share, to steadily below $100. The shares TCV is purchasing from Netflix will sell at $85.80, according to the filing, the sale of which hinges on Netflix’s ability to sell $200 million common stock to non-affiliated third party buyers. The company separately put up stock for an undisclosed amount.

A second filing reads, “We intend to use the net proceeds from this offering for general corporate purposes, including working capital and capital expenditures. From time to time we evaluate potential acquisitions of or investment in businesses, technologies, or products that complement our business, although we have no present commitments or agreements to enter into any acquisitions or investments.”

According to a letter to investors, Netflix chief executive officer Reed Hastings and chief financial offer David Wells predict revenue will be lower than anticipated in the fourth quarter, though they have seen cancellations slow. They also see a future for international business and are opening up offices in the UK and Ireland.